Monday, April 22, 2013 6:07 pm

Haslam: Pilot reputation swings from best to worst

By ERIK SCHELZIGAssociated Press

Cleveland Browns owner Jimmy Haslam on Monday acknowledged a massive hit to the credibility of the family-owned Pilot Flying J truck stop chain following FBI allegations of the widespread fraud of customers at the country's largest diesel retailer.

Haslam announced at the company's Knoxville headquarters that he has suspended several members of the sales team after an affidavit filed in federal court disclosed secretly recorded conversations in which Pilot staff boasted about taking advantage of less-sophisticated trucking company customers.

"I, more than anybody, understand the damage that's been done to our reputation, our brand and our relationships in the trucking community," Haslam said. "Eight days ago I think we had the best relationships, the best trust in the trucking industry. And we now have the worst. I understand that, I accept responsibility for it."

Privately held Pilot Flying J posted $29 billion in revenues in 2012. Haslam, who bought the Browns last year, is the brother of Tennessee Gov. Bill Haslam, who also maintains an undisclosed stake in the company founded by their father with a single gas station in 1958.

Jimmy Haslam didn't name the people placed on administrative leave, specify how many have been suspended or whether they are still being paid. He gave a statement to reporters but refused to take questions.

Haslam has denied wrongdoing and dismissed suggestions he step aside from running the company or the Browns while the investigation is underway. He previously described the investigation as focusing on just a small portion of the company's business.

The recordings made for the FBI investigation show that leaders of the Pilot sales team derided some clients as unsophisticated, lazy and undeserving of rebates they had negotiated when signing a deal to buy fuel from Pilot. The affidavit indicates millions of dollars were unfairly withheld.

FBI Special Agent Robert H. Root wrote in an affidavit that the practice was known by a variety of euphemisms including "jacking the discount," `'manual rebates," and "screwing" the customer.

Haslam said while the company isn't judging the guilt or innocence of the employees placed on leave, "We cannot ignore the content of the federal affidavit released last Thursday evening."

Haslam said internal auditors are converging at company headquarters to review all 3,300 contracts with trucking customers and to "proactively address any miscalculations." He said he also planned to travel to meet with officials at trucking companies who were specifically mentioned in the FBI transcripts.

Other changes include creating the position of chief compliance officer and convert all payments to electronic billing.

"I don't want to hear the term `manual transaction' again at Pilot Flying J after June 30," he said.

The company also plans to hire an independent special investigator to examine allegations of abuse and handle all inquiries related to the federal investigation.

Haslam called a decision to have the investigator report directly to the company's board of directors "an outstanding idea" that should inspire confidence in how serious the allegations are being treated.

A company spokeswoman said the Pilot Flying J does not disclose the names of its board of directors.

Haslam said the company faces a tough path toward rebuilding its relationships with customers.

"I understand we have a long way to go - we're approaching it very humbly, hat in hand," he said. "And we'll do what we can over a period of time to regain the trust of the trucking companies."

Haslam told reporters he didn't closely read the 120-page affidavit until Friday evening, after he had read a statement in which he said he wouldn't step aside because he had done nothing wrong.

He said he has since spoken with at least one executive of a trucking company that the affidavit says was cheated in the scheme and attempted to speaking with another one.

Meanwhile, trucking company Atlantic Coast Carriers Inc. of Hazlehurst, Ga., has filed a lawsuit against Pilot in Knoxville circuit court over the rebate allegations, and is seeking class-action status in the case.